With the 50th birthday of Seven Lakes I had the opportunity to interview Mr. Alan Shaw, one of the original developers of Seven Lakes to enlighten residents to a factual version of our history with a Six PartSeries, “The 50 Year Saga Of Seven Lakes.“
This is the part of the history of Seen Lakes that has Triumph and Tragedy. Also, critical date in February of 1983.
Located west of highway 211 at the intersection of Seven Lakes Drive with 211, there was three large tracts of land that were adjacent to each other. Two of the large tracks, about 1000 acres each, were owned by West End residents Clyde Auman and Billy Johnson.The other large track of about 600 acres was owned by Johnson’s brother-in-law from Atlanta. Shaw does not remember his first name, but his last name was Morgan.
Topographic maps indicated that with the addition of several smaller tracts of land there was a natural lake basin that would impound about 1000 acres of water.The challenge was that it would require a dam of significant length and about 100 feet high.Fred Lawrence was convinced that this was doable and would provide the path to financial success for the developing company Longleaf Incorporated, the North Side developing company.
Lawrence was sure this was the correct path, he entered contracts with the 3 major property owners to buy their land without bringing the issue to a Board of Directors.Shaw is unsure if Lawrence consulted with Joe Cline, one of the original partners, but is certain that he was not consulted prior to contracts being entered and pre-sales starting.The original Seven Lakes was sold on a promise and Seven Lakes West property was going to be the same.
Once again, Jim Pate, who Shaw says was the most influential, non-partner in the development of Seven Lakes was contracted to do the land planning, find specialty dam engineers to design the dam, and oversee the construction project as an engineer.
Pate died in the early 2000’s without having the opportunity to see the near buildout of the community he designed.While, recognizing that Pate was doing the professional job he was hired to do, Shaw simply says that Pate does not receive enough credit for the product that he and his team at Pate-Mullins PA produced.
There was considerable disagreement primarily between Shaw and Lawrence about the development of Seven Lakes West being undertaken.This ultimately resulted in Lawrence stepping down as President of Longleaf Incorporated and Shaw taking that position reluctantly.
The die had been cast before the transition in management, lakefront lots were pre-sold at a price of $10,000. A master list was assembled with a picking order for lots determined by the date and time the purchase was made.Ultimately, there were a few more than 500 lots around an 881 acre +/- lake.Quick arithmetic comes to those lots producing a bit over $5,000,000.The elephant in the room was the cost of developing the West Side would ultimately exceed $12,000,000.
While the initial impact on the developing company was to provide short-term cash relief, the long-term impact was on a path of almost certain failure of the developing company.The future of Longleaf Incorporated and the completion of Seven Lakes West was uncertain at best.
Shaw said that one of the more difficult days for him was making a presentation to the Board of Directors of Longleaf Incorporated were he laid out the hard financial reality.Three options were presented to the Board of Directors.1st finding a buyer, 2nd finding significant master financing, 3rd declaring bankruptcy.
Given the circumstances, bankruptcy was the most likely outcome.Lawrence likely disagreed with Shaw’s assessment but backed it with the Board to the extent, with his extensive sales contacts, he looked for prospective buyers. After about 18 months of trying to find financing to complete the project to no avail, Lawrence found a prospective buyer.
Seven Lakes West had the potential of being a magnificent property if only someone could get to the finish line with the construction.
Interstate sales registration was completed and lake construction had commenced with significant progress made on dam construction. Roads inside of the main loop, Longleaf Dr. were mostly completed.Unlike with Seven Lakes North, the original intent was to pave the roads.The HUD registration filing looked like a disaster area as it reflected on every intended amenity with the disclaimer that there was “ NO FINANCIAL ASSURANCE of COMPLETION”Sales efforts for unsold, mostly lake view properties, actually were surprisingly good.
With the developer marketing of the property, local realtors were mostly shutout from sales.This strategy played an important role in staying out of bankruptcy.In a future article, Shaw will discuss howimportant the real estate brokerage community was in the successful marketing of the property during later years. But, for the current situation, it was important that the sales largely be controlled internally. The reason for the need for control was very simple.The marketing efforts required significant expense because of the large geographical area that was being marketed.Sales expense with advertising, sales commissions, office overhead, and rental homes for clients averaged about $7,500 per retail sale averaging $25,000, or 25%. If local realtors simply picked off the prospective buyer once the developer had gotten them here, it could not be sustainable.The resale inventory was the best lakefront property, the developer had to control the market rather than encourage mass listings of the best property which was originally purchased for 10K a lot to hit the open market.
So, what was the tragedy and triumph? The triumph was an amazing propertyand the tragedy was failure of the original developer to see it to completion. What was the significance of February of 1983? The sale of all the assets of the community owned by Longleaf Incorporated and Peter V Tufts and Associates, the original developers, was completed.
Two companies formed by brothers John and Jim Pridgen bought all the assets of Longleaf Incorporated and Peter V Tufts and Associates.The purchase price: assuming all the liabilities of both companies.The two original companies were both dissolved in accordance with North Carolina laws.Three of the four principles Fred Lawrence,Alan Shaw, and Peter Tufts were not involved in the new companies nor with each other in business.Joe Cline worked for the new companies for a brief time but was not involved in management decisions for the new developers.Fred Lawrence was still involved in the management of the Seven Lakes commercial area which was not part of the sale to the Pridgen’s.
Daily operations were now in the hands of John Pridgen who was on site andcompany lawyer and significant consultant Donald Billings.